How is INDIA working with the UAE?

02 August 2018

Lab Chat

Over the last six months, India has finalised a number of trade deals with the UAE in a bid to bolster its supply of crude oil and achieve a better price per barrel. This collaboration has taken a number of different forms, including bidding alongside Middle Eastern companies for Emirati oil blocks, storing Emirati oil in Indian facilities and investing in refinery projects in the country.

“The Indian bus”

India’s oil minister Dharmendra Pradhan has highlighted how the growing demand for oil in his country makes India an attractive place for investments and partnerships at the moment. “Oil producers don’t want to miss India’s bus,” he told Reuters. Some of the ongoing and concluded deals with the UAE include:

  • An interest in the Lower Zakum concession. In February, the Abu Dhabi National Oil Company (ADNOC) awarded a 10% stake in the offshore reserves to a conglomerate of Indian companies, which is the first time that any Indian firm has been granted an interest in Abu Dhabi’s oil and gas.
  • Strategic crude oil storage. At the same time as the Lower Zakum deal, ADNOC also agreed to store 5.86 million barrels of crude oil in the underground storage facility in the Indian city of Mangalore. The arrangement was made with the partnership of Indian Strategic Petroleum Reserves Ltd (ISPRL), which is owned by the Indian government. .
  • Oil block auctions. Negotiations are ongoing for India to appear in the next round of auctions for UAE’s oil blocks, bidding alongside Middle Eastern companies such as Mubadala. Pradhan has indicated that the country would be open to leasing more storage space at its Padur facility as part of the deal if necessary. 
  • Mega-refinery plant. India has signed a deal with both ADNOC and Saudi Aramco to invest $44 billion (Dh161.6 billion) in the creation of a new crude oil refinery in the country. The deal will allow India to bolster its refining capabilities and allow both countries greater access into the burgeoning Indian market.

Diversifying Indian oil imports

Keen to keep oil prices below this year’s high of $80 per barrel, Indian representatives have met with official ambassadors of OPEC countries to discuss India’s growing influence in the fossil fuel sector. They have also met with Chinese officials to discuss the possibility of forming an “oil buyers’ club”, which could help to stabilise the market.

Outside of Asia, India has also looked to the United States of America to meet its rising oil demands. Last October, received its first ever shipment of US oil as it imported 1.6 million barrels from the USA at the same time as 400,000 barrels arrived from Canada. Another 1.9 million American barrels are expected to arrive in the near future, since North American oil currently represents a cheaper source of energy than alternatives closer to home.

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